participate with growth, defend with dividends How Capital Group’s active approach can strengthen your U.S. equity allocation

Read footnotes and important disclosures
 

Markets are changing. Are you ready?

Risks are rising, but opportunities remain

Many valuation measures look extended. Indexes are concentrated. Passive exposure is high. Yet markets are broadening, earnings growth is strong and the AI cycle is evolving.

We’ve delivered better outcomes

Our U.S. equity funds have delivered index-beating results. We believe greater diversification, flexible positioning, deep research and a long-term orientation promote better outcomes.

S&P 500 concentration reaches new high

Percentage of market capitalization in top 10 companies

A line chart shows the percentage of market capitalization held by the top 10 companies in the S&P 500 Index from 1996 to 2025. The chart highlights increasing concentration over time, with notable peaks and troughs, the highest peak near 40% in 2025 and the lowest trough under 20% around 2016, with a long-term average of 22.2%.

Sources: Capital Group, Morningstar, MSCI, S&P Dow Jones Indices. As of 9/30/25. Figures represent the sum of the top 10 largest holdings of the index on a monthly basis.

Advisors expect to pivot into active U.S. equity strategies

Percentage share of advisors anticipating change in asset class usage over next six months

Sources: Escalent, Cogent Syndicated, Advisor Brandscape® 2025.

Better outcomes and less concentration

Our U.S. equity funds have outpaced their indexes

Percentage rolling success rates vs. benchmarks

Portfolios with less concentration

Percentage weight in Magnificent 7 stocks

Source: Capital Group. As of 9/30/25. Rolling monthly success rates are for the American Funds® and ETFs noted in the right-hand chart. Observation periods for equity funds are based on individual inception dates and are for the full lifetime of each fund. The primary benchmark for all 10 of these funds is the S&P 500. Magnificent 7: Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla. Alphabet is represented by both Class A and Class C shares. R1KG – Russell 1000 Growth Index, CGGR – Capital Group Growth ETF, AMCAP – AMCAP Fund®, CGUS – Capital Group Core Equity ETF, GFA – The Growth Fund of America®, ICA – The Investment Company of America®, CGDV – Capital Group Dividend Value ETF, FI – Fundamental Investors®, WMIF – Washington Mutual Investors Fund, CGCV – Capital Group Conservative Equity ETF, AMF – American Mutual Fund®. CGGR – Capital Group Growth ETF, AMCAP – AMCAP Fund®, CGUS – Capital Group Core Equity ETF, GFA – The Growth Fund of America®, ICA – The Investment Company of America®, CGDV – Capital Group Dividend Value ETF, FI – Fundamental Investors®, WMIF – Washington Mutual Investors Fund, CGCV – Capital Group Conservative Equity ETF, AMF – American Mutual Fund®.

Participate with dynamic growth

While valuations remain elevated, they’re supported by strong earnings growth and robust free cash flows bolstering AI investment. Beyond technology, opportunities exist across sectors such as consumer goods, industrials and health care — creating a broader landscape for growth.

Forward P/E multiple of S&P 500 top and bottom valuation quintiles (sector-neutral)

A line chart shows data from 1985 to September 30, 2025. The y-axis represents valuation multiples from 0 to 40 times forward price-to-earnings. One line shows the highest valuation quintile, averaging 20x since the mid-1980s and currently at 29x. Another line shows the lowest valuation quintile, averaging 10x since the mid-1980s and currently at 11x. The chart highlights that valuation multiples for the highest quintile have risen significantly over time, especially around 2000 and after 2015, while the lowest quintile has remained relatively stable. The chart illustrates the widening gap between high- and low-valuation stocks.

Source: Goldman Sachs. As of 9/30/25. P/E: Price-to-earnings ratio. Forward P/E represents the P/E multiple for the next fiscal year. Price-to-earnings (P/E) ratio: Stock price divided by earnings per share. Valuation: An estimate of a company’s worth based on metrics including earnings, revenue or assets.

How our approach to U.S. equities has outpaced the market

Hypothetical portfolio: 50% CGGR — Capital Group Growth ETF and 50% CGDV — Capital Group Dividend Value ETF vs. S&P 500

 

Putting it into practice: CGDV and CGGR have invested in a more diverse group of stocks relative to the index. CGDV’s focus on companies expected to pay steady or rising dividends has led the fund to invest in quality companies that have shown strong earnings growth. CGGR’s selective approach — informed by fundamental research — has pursued opportunities more broadly in new growth areas like consumer discretionary and communication services.

 

 

A table compares allocations for CGGR – Capital Group Growth ETF, CGDV – Capital Group Dividend Value ETF and the S&P 500 Index across information technology, financials, consumer discretionary, communication services, health care, industrials, consumer staples, energy, utilities, real estate and materials sectors. CGGR has the highest allocation in the consumer discretionary and communication services sectors, CGDV has the highest allocation in the health care, industrials, consumer staples, energy, utilities and materials sectors, and S&P 500 has the highest allocation in the information technology, financials and real estate sectors. CGGR has the lowest allocation in consumer staples, energy, utilities, real estate and materials. CGDV has the lowest allocation in information technology, financials, consumer discretionary and communication services sectors, and the S&P 500 Index has the lowest allocation in the health care and industrials sectors.

Source: Morningstar. As of 9/30/25.

How Capital Group has delivered

Capital Group’s equity-focused mutual funds have outpaced their benchmarks over their respective lifetimes over most 10-, 20- and 30-year rolling periods, on average1:

A series of pie charts show the success rates for Capital Group's equity focused mutual funds, over rolling monthly periods from January 1, 1934, to December 31, 2024. For 10-year, 20-year and 30-year periods, Capital Group's equity focused mutual funds had a success rate of 70%, 86% and 93%, respectively.

Privately owned

We can maintain a long-term view and do what we think is best for investors.2

Aligned with investors

Portfolio managers invest alongside their shareholders to focus on long-term outcomes.3

An industry leader

With an evolving product suite and assets totaling more than $3 trillion, Capital Group is the largest active U.S. fund manager.4

Low expenses

Our equity-focused mutual fund expenses are among the lowest in the industry.5

About Capital Group

“Our investment process, The Capital System, combines collaborative research with diverse perspectives and a long-term view. It is built for resilience — through cycles, across styles and with conviction.”  

 

Martin Romo
Chair and chief investment officer

Logo. The Capital System, trademark symbol.

Footnotes/Important information:
 

1 Source: Capital Group. As of 12/31/24. Calculations cover the time frame from January 1934 through December 2024 and are based on rolling monthly periods over each of the existing 
funds’ respective lifetimes for Class F-2 shares at net asset value.


 

2 Portfolio manager compensation puts increasing emphasis on long-term results and is based on 1-, 3-, 5- and 8-year periods.


 

3 Source: Morningstar. As of 2/19/25. Ninety-seven percent of American Funds assets are invested in mutual funds in which at least one manager has invested more than $1 million.
 

4 Assets under management claim based on preliminary Capital Group data as of 9/30/25. Largest U.S. mutual fund manager information based on Morningstar data on open-ended mutual fund assets (excluding fund of funds) as of 9/30/25.
 

5 Sources: Capital Group, Lipper. Based on American Funds expense ratios for Class F-2 shares available on September 30, 2025.
 

Multiple: A way to gauge company performance by dividing one metric by another. Above, it refers to the P/E ratio. 


 

Success rate: How often a fund outpaced peers or benchmarks. 


 

Standard deviation: A measure of return variance over time. Greater positive or negative values indicate greater volatility. 


 

Volatility: A measure of how much a stock’s price fluctuates. Higher volatility means larger price swings and more risk. 


 

Russell 1000 Growth Index: Tracks large-cap U.S. growth stocks by market capitalization. 


 

Russell 1000 Value Index: Tracks large-cap U.S. value stocks by market capitalization. 


 

S&P 500 Index: A market-capitalization-weighted index of about 500 major U.S. stocks. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.


 

S&P 500 Dividend Aristocrats Index: Equal-weighted index of S&P 500 companies that have raised dividends for more than 25 years. 


 

MSCI USA High Dividend Yield Index: Focuses on U.S. large- and mid-cap stocks with strong, sustainable dividends, excluding REITs.

Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Investing for short periods makes losses more likely. Prices and returns will vary, so investors may lose money. View mutual fund expense ratios and returns. View ETF expense ratios and returns.
For Capital Group ETFs, market price returns are determined using the official closing price of the fund's shares and do not represent the returns you would receive if you traded shares at other times.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the ETF prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. This and other important information is contained in the mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
Capital Group exchange-traded funds (ETFs) are actively managed and do not seek to replicate a specific index. ETF shares are bought and sold through an exchange at the then current market price, not net asset value (NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV when traded on an exchange. Brokerage commissions will reduce returns. There can be no guarantee that an active market for ETFs will develop or be maintained, or that the ETF's listing will continue or remain unchanged.
There have been periods when the results lagged the index(es) and/or average(s). The indexes are unmanaged and, therefore, have no expenses. Investors cannot invest directly in an index.
FTSE/Russell indexes: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies. FTSE indexes are trademarks of the relevant LSE Group companies and are used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company's express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
Each S&P Index ("Index") shown is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Capital Group. Copyright © 2026 S&P Dow Jones Indices LLC, a division of S&P Global, and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Portfolios are managed, so holdings will change. Certain fixed income and/or cash and equivalents holdings may be held through mutual funds managed by the investment adviser or its affiliates that are not offered to the public.
Totals may not reconcile due to rounding.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses.
Certain share classes were offered after the inception dates of some funds. Results for these shares prior to the dates of first sale are hypothetical based on the original share class results without a sales charge, adjusted for typical estimated expenses. 
  • Class F-2 shares were first offered on 8/1/2008.
Results for certain funds with an inception date after the share class inception also include hypothetical returns because those funds' shares sold after the funds' date of first offering. View dates of first sale and specific expense adjustment information.
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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.
© 2026 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar, its content providers nor Capital Group are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Information is calculated by Morningstar. Due to differing calculation methods, the figures shown here may differ from those calculated by Capital Group.

Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. (Also applies to CGGR and CGUS).

 

Nondiversified funds have the ability to invest a larger percentage of assets in the securities of a smaller number of issuers than a diversified fund. As a result, poor results by a single issuer could adversely affect fund results more than if the fund were invested in a larger number of issuers. See the applicable prospectus for details. (Also applies to CGCV and CGGR).